Auto sales drop 16-year low in December due to demonetisation

Nikhil PuthranWednesday 11 January 2017, 18:35 PM

Post withdrawal of high denomination currency notes early in November 2016, the auto sector has witnessed a constant drop in sales, especially in December when it saw 16-year low. Reports indicate a drop in auto sales across segments by about 18.66 per cent due to weak consumer sentiment and cash crunch post demonetisation.

As per data released by Society of Indian Automobile Manufacturers (SIAM), automakers sold 12,21,929 vehicles in December 2016 as compared to 15,02,314 units in December 2015 including commercial, passenger vehicles and two and three wheelers. Light commercial vehicles have been the only segment that has witnessed a growth of 1.15 per cent. Though SIAM believes that impact of the demonetised Rs 1,000 and Rs 500 is temporary, demand for new vehicles is likely to remain weak till the new budget is announced.

Motorcycle sales which sees a major chunk coming from rural areas witnesses a 22 per cent decline to 5,61,690 units. Unlike buyers in the city who opt for loans and cheque payments, customers in rural areas opt for cash payments. With the demonetisation issue likely to be resolved in the coming months, the automakers are likely to witness decent amount of growth in sales.